- The World Bank recently published a new report, explaining that the remittance sector will see a major drop.
- The coronavirus pandemic reduced the number of employed migrants, which will directly impact their ability.
- Another party that will be strongly impacted are crypto firms targeting the remittance sector.
The ability of cryptocurrencies to send money internationally in an instant and at almost no cost at all found a lot of use in the remittance sector. There are plenty of firms that are now targeting that sector. Meanwhile, millions around the world continue to work in foreign countries and send money home to their families.
However, many of those crypto firms will have to prepare themselves due to the World Bank’s recent prediction. The bank announced that it expects to see a major crash of the global remittance industry. It estimates that the industry will retract by around 20%.
What caused the drop?
As expected, the cause of the expected move is the same as in other sectors — the coronavirus pandemic. The report came out on April 22nd, and it concerns the predictions regarding the rest of 2020. The WB believes that this will be the largest remittance decline in recent history.
“The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies.” The bank also recognized that remittances are a vital source of income for many of the developing countries.
The World Bank Group’s president, David Malpass, said as much himself. He added that remittances provide food, healthcare, and all other basic needs for countless families.
A massive loss for the remittance sector
However, the virus’ impact on the economy is huge and undeniable. It already led to slashed wages, unemployment of migrant workers, and more. In fact, the failing employment of migrant workers will cause a 19.7% drop in remittances, as the bank suggests. The estimated loss that millions of households will suffer is believed to be around $445 billion, in total.
The remittance flows to low and middle-income countries exceeded foreign direct investments, according to the report. Crypto firms like Ripple recognized this, and found an opportunity to help make them faster, cheaper, and easier. However, with the drop in the number of employed workers, there will be less money to send. This will have a major impact on the entire world, and it is certainly something to pay attention to.